Price markdown

Price markdown

A price markdown is a deliberate reduction in the selling price of retail merchandise. It is used to increase the "velocity" (rate of sale) of an article, typically for clearance at the end of a season, or to sell off obsolete merchandise at the end of its life.

The timing and level of markdowns in a selling season is critical to maximising return on sales. This is often measured as "revenue realization": the proportion of the potential original selling price achieved. For example, a revenue realization of 50% means that only half the potential full-price sales value was achieved by the end of the season. It is also important in minimizing "terminal inventory", i.e. the amount of merchandise left when the season is finished.

A recent trend has been to use Demand Optimization software to establish the most desirable timing and level of markdown. Optimization techniques can be used to determine where the best combination of revenue realization and terminal inventory is going to come from, for example, comparing a tactic of low-level markdowns from early in the season against one of later, deeper reductions.

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  • markdown — ☆ markdown [märk′doun΄ ] n. 1. a marking for sale at a reduced price 2. the amount of reduction in price …   English World dictionary

  • markdown — The amount subtracted from the selling price of securities when they are sold to a dealer in the OTC market. Also, the discounted price of municipal bonds after the market has shown little interest in the issue at the original price. Bloomberg… …   Financial and business terms

  • markdown — mark|down [ˈma:kdaun US ˈma:rk ] n a reduction in the price of something markdown of ▪ a markdown of 15% …   Dictionary of contemporary English

  • markdown — UK [ˈmɑː(r)kˌdaʊn] / US [ˈmɑrkˌdaʊn] noun [countable] Word forms markdown : singular markdown plural markdowns a reduction in the price of something …   English dictionary

  • markdown — [[t]mɑ͟ː(r)kdaʊn[/t]] markdowns N COUNT A markdown is a reduction in the price of something. Customers know that our stocktake sales offer genuine markdowns across the store …   English dictionary

  • markdown — noun (C) a reduction in the price of something: a markdown of $10 …   Longman dictionary of contemporary English

  • price cut — Synonyms and related words: abatement, agio, allowance, bank discount, break, breakage, cash discount, chain discount, charge off, cheapening, concession, cut, decline, deduction, deflation, depreciation, devaluation, discount, dive, drawback,… …   Moby Thesaurus

  • Markdown — The difference between the highest current bid price among broker dealers in the market and the lower price that a dealer charges a customer. The broker offers a lower price to try stimulate trading in hopes that they will make the money back on… …   Investment dictionary

  • markdown — Synonyms and related words: break, cheapening, cut, decline, deflation, depreciation, devaluation, dive, lowering, nose dive, plummet, plummeting, plunge, price cut, price fall, price reduction, reduction, sag, slash, slump …   Moby Thesaurus

  • markdown — noun Date: 1880 1. a lowering of price 2. the amount by which an original selling price is reduced …   New Collegiate Dictionary

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